Japan's Window Zombies

TOKYO - Walk into the office of most any big, old Japanese corporation, and eventually you will come across "window tribe," the abandoned souls of Japan Inc., boredom etched deeply into their faces. So called by their colleagues because they do little else all day but stare glumly out of the window, they are the office duffers, the odds and ends that nobody wants.

Then why not get rid off them? That’s the question Western businessmen might ask, and perhaps, what their Japanese managers secretly desire. The boss that tries it, however, will soon find himself deep in doodoo. Culturally seen as mean-spirited, firings may also fall foul of Japan’s tough labor standards. Should sackings be contested in court tribunals, more often than not, the employer will lose. Hence the window zombies.

It explains why, even after almost two decades of lackluster economic growth, Japan has the second-lowest jobless rate of the G7 industrialized nations along with the lowest productivity. Underemployment is a more serious problem than unemployment in the world’s second-biggest economy.

One way around labor rules is to never really hire your workers in the first place. Companies increasingly pick up staff from an employment agency or bring them in on short-term contracts, so when they get the chop, they aren’t technically being fired. It works with young folk, but with their older colleagues who are fully fledged staff, corporations resort to psychology to encourage stubborn workers to opt for early retirement.

Getting a crappy desk is a clear hint that your employer may think its time for you to go. Exiling workers to an remote offices is rare but not unheard of. Letting them pass the day in idle humility doesn’t work on everybody, and a paycheck awaits at the end of each month for those who can put up with the tedium of "in-house retirement."

Dribs and drabs of early retirees sometimes, though, just aren’t enough. When bad times call for downsizing with more oomph and mass layoffs are out of the question, merging with an affiliate or partner may offer corporations the chance to lighten payrolls. This may partly explain the reasoning behind a merger in Tokyo last week.

Thursday marked the end of four decades of mergers that has reduced eight securities firms affiliated with Japan’s second-biggest financial group, Mizuho Financial, into one brokerage that inherits 5,000 workers from Shinko Securities, itself the product of a merger in 2000, and 3,000 employees from Mizuho Securities, which also provides the new entity with its name.

Downsizing isn’t the reason the two give for the marriage: It’s all about synergy, they insist, and can produce pages of jargon-filled PowerPoint graphics to illustrate how a retail and wholesale broker can dovetail. They may convince investors on some points, but insisting, as they do, that no jobs--not even those in the back office, personnel department or IT office--will go stretches the bounds of believability. When you have two people doing one person's work, one of them is going too end up gazing out of the window. One plus one, divided by two, equals one.

These companies need to shed costs. In the last business year before the merger, Shinko had a net loss of $135 million, while its partner posted a loss of $345 million following a $4.2 billion loss the year before. Had it given every worker $1 million each and sent them home for 12 months, it would have lost less.

Japan-style downsizing, however, is risky. By encouraging staff to go, you may end up losing the wrong ones. Those who can find jobs elsewhere will. The duffers that can’t will stay and continue to get paid to staring out the window.